00:00:00
You know, Henry Ford, China's laws on
00:00:02
wages and purchasing, and India's jump
00:00:05
from poverty to global economic
00:00:06
dominance all have one key thing in
00:00:09
common. Their case studies in how
00:00:11
productivity, wages, and demand can pull
00:00:13
an entire group of people from poverty
00:00:15
to middle class. A country doing this is
00:00:17
one thing, but one person, well, that's
00:00:20
a whole different ballgame. And the
00:00:22
reason you can listen to this while
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driving in your car on your way to work,
00:00:25
gym, or your favorite restaurant is
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because one man made an insane bet that
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everyone else was sure would fail. And
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his bet changed the course of human
00:00:34
history. Welcome to Alux, the place
00:00:37
where future billionaires come to get
00:00:39
inspired.
00:00:40
You don't have to serve the rich to
00:00:42
become rich. If we had to sum up Henry
00:00:46
Ford's entire contribution to the world
00:00:47
as we know it, well, that's the sentence
00:00:49
we would go with, which seems slightly
00:00:51
off track when you're talking about the
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man who created the first mass consumed
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car. But this is the belief that fueled
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his desperate need to make cars for
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everyone, even those who couldn't afford
00:01:02
it yet. The strategy was simple. If more
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people could buy your product, you'll
00:01:08
make more money. Except Ford had two big
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problems getting in the way. First of
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all, at the time, wages were so low only
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the rich could afford to pay for
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anything that wasn't basic food,
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clothing, or shelter. And secondly,
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production costs were so high that even
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if wages tripled for everyone, they
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still wouldn't be able to afford to buy
00:01:28
a car. To him, the solution was simple.
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Increase the wages and to make
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production costs much cheaper. So,
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tackling these solutions would be no
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small feat, right? But they were far
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from his biggest challenge. We almost
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didn't have mass-roduced cars because
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the elites and lawmakers didn't believe
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that poor people would ever want one.
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Saying that Henry Ford reshaped the
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structure of industrial capitalism
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sounds kind of dramatic, especially if
00:01:58
your knowledge starts and ends with him
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building cars. But it is the truth.
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Okay. Before he came along, companies
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made goods and products for wealthy
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people. Workers were never seen as
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consumers. People basically clutched
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their pearls thinking about it. It
00:02:13
simply wouldn't do because workers were
00:02:16
just labor costs and that had to be
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minimized as much as possible. But Ford,
00:02:21
he changed that system. You see, wealthy
00:02:24
elites and lawmakers didn't consider
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workingclass people as normal people
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with wants and desires. It sounds
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ridiculous now, right? But this was the
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late 1800s, so they had two key reasons
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for thinking this way. On the one hand,
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cars did not start off as something
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practical or useful. They were a status
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symbol and rich men's toys. The rich
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weren't using cars to get from point A
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to point B. They weren't reliable or
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powerful enough for that. So, it was
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purely a leisure activity. You spend the
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day taking a fancy ride through the city
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or countryside, kind of like you would
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go on a horseback ride as an activity if
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you were rich, not to actually get
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somewhere. And on the other hand,
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workingclass families tend to live close
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to their jobs. They didn't travel very
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far and had no concept of personal
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transport as freedom. They got around
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with public transportation by horse,
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street cars, or walking. And their lives
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and routines were organized around that.
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So manufacturers believed that even if
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cars became cheaper, poor people simply
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wouldn't buy them. But Henry Ford knew
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that wasn't true. He'd grown up poor
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himself. He was born to a family of
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farmers and not the rich kind. His
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family was a small family farm in rural
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Michigan. His father expected him to
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take over the farm, but Ford had other
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plans. From a young age, he was curious
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about mechanics. He would dismantle and
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rebuild watches and farm equipment. It's
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like he spoke the language of inanimate
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objects or something. He didn't have any
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formal education, but he was undeniably
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talented. And once people saw this, they
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couldn't help but hire him. That's how
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he became a machinist apprentice in
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Detroit when he was still in his teens.
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And how he eventually became chief
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engineer at the Edison Illuminating
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Company. That's where he built the first
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gasoline powered car, the quadricycle.
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Now, this was during a time when
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everyone was traveling with horsedrawn
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carriages, trains, and steamboats.
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Transportation was designed to follow a
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path that was already decided, and only
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the wealthy got to veer off that path
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and go to different places. Ford knew
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that just because you weren't in the
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upper middle class didn't mean you
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didn't desire freedom and fun. He saw
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firsthand the desire that follows
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access. Once you're actually able to get
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something, you start to imagine your
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life around it and then you want it
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more. Without access, your imagination
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has to make too many leaps to imagine
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how your life would be like with it. It
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was never just about a car. He brought
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movement and freedom to the working
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class and that changed everything for
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them. But, you know, it was far from
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smooth sailing to get there because for
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the first few years, the people who
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doubted Ford's vision, they were proved
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right. His first car company, the
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Detroit Automobile Company, flopped
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within 2 years. The cars kept breaking
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down and they cost a fortune to build.
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His investors lost money and he lost his
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reputation. Before he could convince
00:05:30
people to buy in again, he had to repair
00:05:32
his reputation. And so he built a car,
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entered a 10mi race, and won, beating
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the favorite at the time. The win gave
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him the attention and respect he needed,
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and most importantly, it got investors
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interested again. And you know, there's
00:05:47
truly so much involved in building a
00:05:50
business and a following. But you don't
00:05:52
have to go on this track all by
00:05:53
yourself, okay? We built the Alux app
00:05:55
exactly for people like you. People who
00:05:58
want to bring their entrepreneurial
00:05:59
dreams to life. We've helped thousands
00:06:01
of people on their journeys. We've even
00:06:04
helped mint a few fresh millionaires and
00:06:06
we would love for you to join their
00:06:07
ranks. So, if you download the app and
00:06:09
scan this QR code, you'll get 25% off
00:06:12
your membership. But back to today's
00:06:14
topic, shall we? So, his next business,
00:06:17
the Henry Ford Company, only lasted a
00:06:19
year. He had constant fights with
00:06:21
investors because he was focused on
00:06:23
racing, not production. So, he walks
00:06:26
out. His next venture finally works out
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where it's the Ford Motor Company and
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his first major success is the Model A
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car. Five years later, he launched the
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Model T. And that's exactly what he
00:06:39
envisioned. Affordable, reliable, and
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easy to repair. Behind the scenes,
00:06:44
though, everything was still a mess. You
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see, Ford insisted on putting all
00:06:49
profits back into the business so it
00:06:51
could expand. Today, this is a huge part
00:06:54
of building a business. But back then,
00:06:56
you put in just enough to keep
00:06:58
production going and you paid dividends
00:07:01
to your shareholders. But Ford, he
00:07:04
refused to do this. He basically ran off
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and held the money hostage and
00:07:07
shareholders lost their minds. The Dodge
00:07:10
brothers were early investors in Ford
00:07:13
and they owned 10% of the company. In
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1916 alone, the company made over $60
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million, about 1.7 billion today. Ford
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announced he would stop paying
00:07:23
shareholders and use that money to build
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a massive new manufacturing plant. It's,
00:07:29
you know, it's kind of funny to imagine
00:07:30
all of these owners already planning
00:07:32
what they're going to do with all their
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riches, only to hear that the man in
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charge has no intention of giving it to
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them. The Dodge brothers filed a lawsuit
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and argued that Ford had a legal duty to
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act in the financial interest of
00:07:44
shareholders and not just his own
00:07:46
vision. Three years later, the court
00:07:48
ruled in their favor and forced Ford to
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pay the dividends. But Ford wasn't just
00:07:54
going to take that one on the chin. No,
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he decided to buy out all of the
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minority shareholders through a secret
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backdoor deal. He set up a new company
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and told everyone he would be leaving
00:08:04
the old one. People panicked and it
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forced a mass selloff and he swooped in
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and bought up their shares, gaining 100%
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ownership of his company. Everything he
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did with his company went against how
00:08:17
the world worked back then. He refused
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to pay dividends and announced he would
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reinvest profits into expanding the
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business. He was sued for this. He
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offered a $5 a day wage, which was super
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high for assembly workers. Economists
00:08:32
called it suicidal and said it would
00:08:34
destroy profit margins. He chopped up
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the process of building into tiny steps
00:08:39
and hired regular unskilled workers.
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Experts said this would lead to bad
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quality and mistakes. Oh, and of course,
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they all believed that poor people
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wouldn't want, nor could they ever
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afford cars. It was just for the rich.
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Better to keep it that way. Now, can you
00:08:55
think of anything you believe might
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happen in the future that everyone else
00:09:00
doesn't think would happen? Like, do you
00:09:02
think that AI companions will replace
00:09:05
human relationships? Or do you think
00:09:06
that some countries will break off into
00:09:09
network states ruled by tech giants
00:09:11
instead of democratic governments? Or
00:09:14
maybe a system where governments pay
00:09:15
citizens not to work. That way they can
00:09:18
control labor supply, especially in
00:09:20
countries where robots or AI dominate
00:09:23
production. You know, it's really hard
00:09:25
to imagine these scenarios and get a
00:09:27
feel for where we're headed. We've been
00:09:29
wrong so many times before. We thought
00:09:32
we'd have flying cars, that we'd already
00:09:34
have colonies on Mars or a cure for
00:09:36
cancer. Except we only have more
00:09:38
information on how difficult it is to
00:09:40
make these things happen. And we have a
00:09:42
whole other load of things that we don't
00:09:44
even think about. This is the climate
00:09:47
that Henry Ford was up against. So
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before you go thinking that you would
00:09:51
obviously have acted differently to
00:09:52
everyone else, put your mind into that
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time frame. It was a risky, crazy bet on
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every front and nobody believed it would
00:10:01
come true. Our biggest mistake, and one
00:10:04
that the world continues to make over
00:10:06
and over again right now, is that we
00:10:07
trust experts maybe a little bit too
00:10:10
much. Experts can be out of touch, but
00:10:13
they're loud and confident, so all we
00:10:15
can hear is the things that they're
00:10:16
saying making sense. Ford flipped that
00:10:19
model. They all knew his moving assembly
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line brought down production costs. He
00:10:25
cut the time to build a Model T from 12
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hours to just 90 minutes when he
00:10:29
introduced the assembly line. That
00:10:31
process with small, repetitive tasks
00:10:34
that unskilled workers could do quickly
00:10:36
meant his employees needed less
00:10:38
training. His company needed fewer
00:10:39
workers and they were building way more
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cars. Not to mention the cars were much
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cheaper than everything else on the
00:10:46
market. And by paying his workers double
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what everybody else paid, he gave them
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an opportunity to spend instead of just
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barely getting by. He paid his employees
00:10:56
enough to make them customers, too. It's
00:11:00
hard to imagine now, but workers were
00:11:02
not always consumers. Only the rich
00:11:05
consumed. The lower classes just barely
00:11:09
survived. He created a self-reinforcing
00:11:12
system which jumpstarted the growth of
00:11:14
the American middle class and kicked off
00:11:16
mass consumerism. When millions of
00:11:18
people spend money like this, it creates
00:11:21
a consumer boom. It's what happened in
00:11:24
postw World War II America when the GI
00:11:26
Bill gave veterans money and savings
00:11:28
were high from wartime rationing. And
00:11:31
with China's middle class expansion when
00:11:33
the government suppressed consumption
00:11:34
and wages for 30 years and then raised
00:11:37
it, urbanized 500 million plus people
00:11:40
and gave them access to credit. And with
00:11:43
India, a country that was too poor and
00:11:46
rural for traditional infrastructure to
00:11:48
scale. But once cheap phones, mobile
00:11:51
data, and digital payments were
00:11:52
possible, the cost of access collapsed
00:11:55
and the economy exploded. This
00:11:57
suppression of access, whether it's done
00:11:59
intentionally or not, creates desire and
00:12:02
demand that's just waiting to escape
00:12:05
once you open the doors. Henry Ford was
00:12:07
the first person in modern history to
00:12:09
recognize this desire banging on the
00:12:11
door. And he was just one man from a
00:12:14
small farming family. Once those
00:12:16
floodgates open up, people who thought
00:12:18
they would never have a chance for
00:12:20
wealth and security in their lifetime,
00:12:22
they can suddenly afford to buy homes,
00:12:24
radios, and clothes. That in turn
00:12:27
creates new markets and jobs in other
00:12:30
industries. And that is how you give a
00:12:32
warm welcome to mass consumerism. Time
00:12:35
and time again, we see this economic
00:12:37
system forget about workingclass people.
00:12:40
There'll be a boom like there was just
00:12:42
after Ford's vision changed the economy
00:12:44
and everyone will run to target
00:12:46
workingclass people and that will create
00:12:48
a middle class and then we'll see the
00:12:51
money starting to siphon toward the top
00:12:53
of the chain again and we lose the
00:12:55
middle class which is kind of what's
00:12:57
happening right now. Although the access
00:12:59
to massive amounts of debt is still
00:13:01
allowing people to look good while
00:13:03
actually sitting below workingclass
00:13:06
level. But we've seen this before, and
00:13:08
the cycle of a poor person who believes
00:13:10
that everyone should have access to the
00:13:12
luxuries the elite have will move the
00:13:14
needle again. Sam Walton did it with
00:13:17
Walmart in the 1960s when his ultra- low
00:13:20
prices and tight supply chain control
00:13:22
allowed him to focus on rural
00:13:24
workingclass America, a demographic that
00:13:26
was ignored by other retailers at the
00:13:29
time. Ray Crook also did it with
00:13:31
McDonald's when he created the fast food
00:13:33
assembly line. McDonald's wasn't
00:13:35
gourmet, but it was accessible. And
00:13:37
really, that's the fundamental need of
00:13:40
every consumer. It's easy to forget
00:13:42
that, right? When your business books
00:13:44
and entrepreneur podcasts are bombarding
00:13:46
you with advice about finding a niche,
00:13:48
solving a problem, and fulfilling a
00:13:50
need, you can lose your head in figuring
00:13:53
out the perfect product. When really,
00:13:55
all people need is something they can
00:13:57
actually access. The ripple effect of
00:14:00
this access is beyond what anyone could
00:14:02
ever dream of. Like India's economic
00:14:05
boom is because of access. And the first
00:14:07
point of access started with Lehun
00:14:09
Xiaomi, the lowcost Chinese-made
00:14:12
smartphone that gave young consumers in
00:14:14
India access to the world. This allowed
00:14:17
them to jump years ahead of the rest of
00:14:19
the world's digital life. Visit India
00:14:21
and China and you'll see how everything
00:14:24
is done through one app on your phone.
00:14:27
your rental application, paying your
00:14:29
rent, paying your other bills, sending
00:14:31
your friends money, everything. And this
00:14:34
access exists because Le Jun had access
00:14:37
to a workforce that could build phones
00:14:39
quickly and cheaply. And that happened
00:14:42
because China spent 30 years becoming
00:14:44
the world's production factory. Just
00:14:47
like the reason you, me, and 90% of the
00:14:51
uh wealthy world can drive around the
00:14:53
country in cars is because Henry Ford
00:14:56
knew that people just need an
00:14:58
opportunity. We've seen time and time
00:15:00
again that aligning your product, price,
00:15:02
and wages can create an explosive and
00:15:05
sustainable business model. One that's
00:15:07
got the potential to change the course
00:15:09
of humanity's future. But it still is a
00:15:13
risky bet because in every case you'll
00:15:15
be betting on a loop working perfectly
00:15:18
and that is rare. Selling to the masses
00:15:21
gives you thin margins and everything
00:15:23
depends on scale and speed. If you can't
00:15:27
reach millions cheaply and quickly,
00:15:29
you'll go broke before you go big. It
00:15:31
happened with Jet.com when they tried to
00:15:33
compete with Amazon. They offered ultra-
00:15:35
low prices through dynamic pricing and
00:15:38
their strategy was based on losing money
00:15:40
upfront, scaling quickly, and making
00:15:42
money later. But they burnt through cash
00:15:45
too fast and couldn't scale fast enough.
00:15:47
By 2020, they were shut down. Better
00:15:50
place, they tried it, too. They wanted
00:15:52
to create mass electric car adoption
00:15:54
through battery swapping stations. They
00:15:56
built infrastructure for EV charging
00:15:58
before EV cars got big. $900 million
00:16:02
later and they hadn't sold a fraction of
00:16:04
what their goal was and by 2013 they
00:16:07
were gone. There's also the trap of
00:16:09
focusing on innovating the process and
00:16:12
not really the product. There's a chance
00:16:14
your product might suck and consumers
00:16:16
won't care how efficient you are if your
00:16:18
product doesn't work for them. That's
00:16:20
exactly what happened with Segue. They
00:16:22
tried to revolutionize personal
00:16:24
transport but ignored the fact there was
00:16:26
no real purpose for the product. Google
00:16:29
Glass that came, went, and took an
00:16:32
estimated $1 billion down the drain with
00:16:34
it. The product was awkward, looked
00:16:37
weird, and made people feel like a
00:16:39
lonely alien. For the process to win, it
00:16:42
has to be paired with value that people
00:16:44
actually want. And that alignment of
00:16:46
productivity, wages, and demand that we
00:16:49
mentioned earlier, well, it's not like
00:16:51
they're naturally sinking up. The
00:16:54
balance is fragile and rare. Japan did
00:16:57
it with Samsung and Hyundai. Scandinavia
00:16:59
did it with public infrastructure and
00:17:01
education. Zara did it with their design
00:17:03
to store in under three weeks system. So
00:17:06
who will be next? Because the world is
00:17:09
due for another middle class revolution.
00:17:11
Okay? And AI hardware, elder care
00:17:13
services, and modular housing are
00:17:16
industries that are brimming with
00:17:17
potential. And our question to you is,
00:17:21
will you watch it happen or will you be
00:17:24
a part of driving that change? If you
00:17:27
voted option two, you're ready for the
00:17:29
Alux app. Here's that QR code again,
00:17:31
complete with a discount courses and
00:17:33
collections that will help you achieve
00:17:35
your dreams. And if you like this
00:17:37
content, then check out our video, Buy,
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Borrow, Die, the free money loophole,
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available only for the rich. I'll see
00:17:43
you there. Until next time, my friend,
00:17:46
take care.
